Tag Archives: United States Department of Labor

Is Your Company’s “Flexible Scheduling” Policy a Violation of Wage and Hour Law?

Contributed by Amanda Biondolino, October 25, 2017

An employer who allows its employees the “flexibility” to self-schedule time off the clock must make sure that it is paying its employees for all time worked. And beware, under the Fair Labor Standards Act (FLSA), “hours worked” is not limited to only that time an employee spends performing his or her job duties. Short breaks of twenty minutes or less are also counted as hours worked and must be paid.

The Third Circuit Court of Appeals recently held as a bright-line rule: Where breaks of twenty minutes or less are in question, the time must be paid. The court adopted the U.S. Department of Labor policy rationale that “breaks of twenty minutes or less are insufficient to allow for anything other than the kind of activity (or inactivity) that, by definition, primarily benefits the employer.” There will not be a factual analysis, or a case-by-case determination. Simply stated, if an employee is at the worksite, and is taking time away from their work-related duties for twenty minutes or less, they must be compensated for that time.

In the case decided by the Third Circuit, the employer did not deny that it permitted its call-center employees to log off their computers and use their time free from any work related duties, but it refused to call those time periods “breaks.” Rather, the employer considered it part of a “flexible time” policy, in which employees could take an unlimited amount of unpaid time away from work at any time, for any duration, and for any reason.

The court rejected the employer’s attempt to characterize time in a way that deprived employees of rights they were entitled to under the FLSA and considered the time an employee spent logged off the computer as a “break.” The employer violated the FLSA by not compensating employees for breaks that lasted twenty minutes or less.

Bottom Line: This is a reminder to employers that all policies and procedures should be vetted by experienced labor and employment counsel. In addition, all time worked including break periods should be accurately recorded, not only to comply with the record-keeping requirements of FLSA, but to document any abuse.

Employers should also keep in mind that some states may have their own break requirements that employers in those states must follow. Therefore, it is imperative that employers review their break policies and check applicable laws to ensure compliance with both federal and state law.

Although federal wage and hour laws do not generally mandate employee breaks, and state laws may vary, a strict policy that forces employees to choose between getting paid and basic necessities such as using the restroom runs contrary to “humanitarian and remedial” purpose of the act and will violate the law. These kinds of short breaks must be compensated. The FLSA and corresponding state wage and hour laws are designed to protect employees, and will be liberally construed.



President Obama Directs United States Department of Labor to Revise Wage & Hour Law

Contributed by Jeffrey Risch and Kelly Haab-Tallitsch

Earlier today, President Barack Obama signed a Presidential Memorandum directing his Secretary of Labor to update the regulations to expand the number of employees eligible for overtime under the Fair Labor Standards Act (FLSA). The president was expected to take more specific action based on statements made by White House personnel earlier this week, but he left virtually all of the details to the United States Department of Labor.

The president set the stage for the Department of Labor to narrow the exceptions to the FLSA by discussing the failure of the executive or professional exemption to keep up with inflation. Commonly known as the “white-collar exemption,” the provision allows employers to classify many workers as executive, administrative or professional, and exempt from the overtime laws.

Under the current federal exemption, generally these salaried workers do not have to be paid overtime if they earn no less than $455 a week and provided their day-to-day duties meet certain qualifications. This $455 level was raised in 2004 by the Bush administration. The president criticized the level, but did not propose it be raised to a specific amount, as had been expected. Economists allied with the White House have previously proposed doubling the current threshold to $1,000 a week which, when adjusted to inflation, would make it similar to the original threshold set in 1976. A change this drastic could require employers to pay overtime to millions more employees.

The Presidential Memorandum instructs the Secretary of Labor to update regulations regarding who qualifies for overtime protection to:

  • Update existing protections in keeping with the intention of the Fair Labor Standards Act
  • Address the changing nature of the American workplace
  • Simplify the overtime rules to make them easier for both workers and businesses to understand and apply

Any new requirements aren’t expected to go into effect until at least 2015. The Department of Labor is not expected to have a recommendation before the fall. Fortunately, any proposed changes would be subject to public comment before they can be approved. As a politically charged initiative, the suggestion of expanding overtime eligibility is already receiving significant attention from all sides and it is possible that strong opposition could cause the administration to scale back any proposals.

As this topic moves to the forefront, employers can prepare by:

  1. Reviewing their current classification of employees as exempt or nonexempt under the current FLSA regulations and state law to ensure current compliance.
  2. Reviewing pay policies and work rules to ensure current compliance and identify any that may need to be updated.
  3. Ensuring processes are in place to track hours worked.

We will continue to monitor and communicate further developments as they occur.

Willful OSHA Violation Leads to Prison Sentence

Contributed by Jonathon Hoag

On November 27, 2013, the owner of a gunpowder manufacturing company was sentenced to 10-20 years in prison for a 2010 explosion that killed two workers.  The evidence uncovered during the OSHA investigation revealed that the two workers were new on the job and had not been adequately trained.  In addition, the workers were hand feeding explosive powders into the equipment because the employer had not instituted certain safety measures for the manufacturing process.

OSHA issued numerous willful violations, including the employer’s failure to train workers, failure to properly store explosives, and failure to provide protective equipment.  The company was issued a $1.2 million penalty and the owner was arrested and charged with manslaughter.  A jury found the owner guilty of two counts of manslaughter and he was sentenced to serve prison time.

This reported incident serves as a sober reminder of the serious consequences that can result from willful (and inadvertent) violations of safety standards.  In addition, employers should keep in mind that OSHA has clearly announced that it has stepped up enforcement measures and is seeking to take punitive action against employers that violate OSHA standards at any level.  As such, a comprehensive audit of the company’s safety program should be added to the list of items to review (along with handbooks, policies, procedures, etc.) in preparation for beginning a new calendar year.

Spanish Version of Revised FMLA Poster Now Available

Contributed by Jonathon Hoag

The U.S. Department of Labor (DOL) has issued the Spanish version of the revised General FMLA Notice Poster.  The FMLA regulations have long-required that all covered employers must post notice of FMLA rights and obligations prominently where such notice can be seen by employees and applicants for employment.  The notice must be posted at all locations where the employer has employees.  The required notice was revised earlier this year to reflect the February 2013 FMLA revisions related to military leave and leave for airline flight crew employees.  The revised poster was just recently made available in Spanish.  It should be noted that the DOL has also translated other FMLA forms and guidance into Spanish, which are available on DOL’s website.

The regulations state that when an employer’s workforce “is comprised of a significant portion of workers who are not literate in English, the employer shall provide the general notice in a language in which the employees are literate.”  Unfortunately, the DOL has not provided specific guidance to determine what constitutes a “significant portion,” so employers must use reasonable business judgment when determining what languages are applicable.

Employers should be sure that updated versions of the FMLA general notice are posted in accordance with the rules.  This includes all electronic postings and postings incorporated in employee handbooks or manuals.  As a reminder, failure to provide proper FMLA notice can jeopardize an employer’s FMLA defense and subject the employer to possible civil penalties.

DOL Significantly Narrows Yet Another FLSA Exemption

Contributed by Suzanne Newcomb

In regulations set to take effect January 1, 2015, the Department of Labor eliminated the Fair Labor Standards Act (FLSA) exemption for home care providers employed through third-party agencies and significantly narrowed the exemption for those employed by households directly.  Under current law, employees who provide in-home care for those who cannot care for themselves due to age, illness or disability are largely exempt from the FLSA’s overtime and minimum wage provisions.  (Though Illinois, Wisconsin, California and handful of other states have state laws in place requiring minimum wage and overtime pay for many of these workers.  Indiana and Missouri and a majority of other states do not.)

In its Final Rule issued September 17, 2013, the DOL largely gutted the so called “companionship exemption” by significantly narrowing its definition of “companionship services.”   Under the new rule, home health care companies, staffing agencies and other employers of in-home care staff will be prohibited from claiming the exemption regardless of the duties their employees actually perform.  Households who hire an employee directly in what the DOL describes as an “elder sitter” role to provide “companionship, fellowship, or protection” may still claim the exemption but only in certain circumstances.  They too will lose the exemption if the employee provides medical services, performs services for others within the infirmed individual’s household or devotes more than 20% of work time to housekeeping, transportation or assisting the infirmed individual with daily living skills (such as eating, bathing, grooming) as opposed to providing companionship and fellowship to and/or oversight of the individual.  

What does this mean for your business?  Those in the home care industry should examine employee pay classifications, compensation structures and staffing levels.  The new rule takes effect in just over a year.  Heavily impacted employers will need that time to craft proper procedures and implement tools to accurately track and record employees’ time and duties; along with the minimum wage and overtime requirements come FLSA mandated record keeping obligations.  Some employers may choose to increase staffing levels or restructure shifts to avoid significant overtime expenditures.  Read the full text of the rule at www.dol.gov/whd/homecare/final_rule.pdf.  Further information and guidance is available at www.dol.gov/whd/homecare.

For employers outside the home care industry, this is but the latest in a trend toward narrowed exemptions to the FLSA.  All employers should review their exempt / non-exempt classifications, time keeping tools and record keeping procedures regularly to ensure they are compliant with current law and that each employee is properly classified in light to the work actually performed.  If challenged, it is the employer’s burden to prove a claimed exemption is appropriate.  Clear and accurate records are the key component in meeting this burden.  Misclassifying an employee as exempt (or failing to properly document hours worked) can be a costly mistake and make the employer on the hook for unpaid wages, overtime, taxes and penalties.

More on DOMA’s Demise – The DOL Updates the FMLA

Contributed by Karuna Brunk

As we previously discussed here and here, on June 26, 2013, the U.S. Supreme Court struck down the federal Defense of Marriage Act (“DOMA”) in United States v. Windsor.  In August 2013, the U.S. Department of Labor issued new rules for the Family Medical Leave Act implementing Windsor.  The DOL has amended its definition of “spouse” to include “husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including ‘common law’ marriage and same-sex marriage.”

This new rule is referred to as “the state of residence rule” because it relies on where the employee lives, as opposed to where a marriage is celebrated.  Under the new rule, an employer is required to provide FMLA leave to an employee seeking leave in order to care for a same-sex spouse with a serious health condition if the employee resides in a state that recognizes same-sex marriage.  Currently only 13 states recognize same-sex marriage – California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, and Washington. 

In accordance with this new rule, employers should review and revise their leave policies.  If an employer has employees who live in multiple states, it may be tempting to apply a blanket policy that gives leave to care for same-sex partners in all cases, regardless of the employee’s state of residence.  However, remember that if an employer grants job-protected leave to an employee who resides in a state that does not recognize same-sex marriage, that leave cannot be counted as FMLA leave.  For example, if an employee wanted to take leave to take care of his sick, same-sex spouse and he resided in a state that did not recognize same-sex marriage, that employee would be entitled to take the full 12 weeks of FMLA leave for another purpose – to take care of his child, for example – in the same calendar year. 

Additionally, note that the DOL has not expanded the definition of “spouse” to include civil union or domestic partner relationships.  This is especially significant for Illinois employers because Illinois recognizes civil unions but does not recognize same-sex marriage.

Not Paying Overtime Properly Can Be Very Costly

Contributed by Sara Zorich

The Department of Labor (“DOL”) announced this week that Harris Health System had agreed to pay over $4 million in back wages and liquidated damages to employees for failure to properly pay overtime.  The issue investigated by the DOL was an alleged failure to include an employee’s incentive pay when calculating overtime premiums resulting in an underpayment.  Under the Fair Labor Standards Act, employers who fail to pay wages properly can owe employees back wages along with an equal amount of liquidated damages.

Employers should review their pay practices to ensure they are properly paying overtime to their employees.  Under federal law and Illinois state law, employers must pay employees 1.5 times their regular rate of pay for any hours worked in a workweek over 40 by the employee.  The regular rate of pay is computed by totaling all of the remuneration for the week (regular pay, incentive pay, shift differential, bonus, etc.) and dividing that number by the number of hours worked in that workweek.  One of the most common mistakes employers make is failing to include the extra compensation (i.e. bonus, incentive pay, etc.) when determining the regular rate of pay.  Below are two examples of overtime calculations:

Weekly Incentive Bonus Example:

An employee earns $10.00 and works 46 hours the week of January 1, 2013.  In that same week, the employee is paid an incentive bonus of $100 for meeting his production goals that week.  His total pay before overtime for the week is $460 (46 hours x $10) + $100 = $560.00.  His regular rate of pay is $560.00 divided by 46 hours = $12.17 hours.  The employee has been paid for all hours worked at straight time for the week so the overtime premium is calculated at one-half of the regular rate of pay: $12.17 (regular rate) x .5 x 6 (overtime hours) = $36.51.  The employees total compensation for the week is $560.00 + $36.51 = $596.51.

Shift Differential Example:

An employee earns $10.00 and works 46 hours the week of January 1, 2013.  In that same week, the employee is paid a shift differential of $1.00/hr for each hour he worked the midnight shift.  He worked the midnight shift for a total of 16 hours this week thus his shift differential was $16.00.  His total pay before overtime for the week is $460 (46 hours x $10) + $16 = $476.00.  His regular rate of pay is $476.00 divided by 46 hours = $10.35 hours.  The employee has been paid for all hours worked at straight time for the week so the overtime premium is calculated at one-half of the regular rate of pay: $10.35 (regular rate) x .5 x 6 (overtime hours) = $31.05.  The employees total compensation for the week is $476.00 + $31.05 = $507.05

Overtime calculations can be even more complicated if employees are paid at more than one rate during a workweek or bonuses or commission payments are allocated over multiple work weeks.  Employers should review the Department of Labor regulations regarding overtime compensation and consult with counsel if they have questions regarding how to properly compute overtime. Small mistakes can add up very quickly and lead to large amounts owed to employees in back wages.

Federal Contractors Beware: A New DOL Rule and New Requirements

Contributed by Karuna Brunk

In an effort to improve the hiring of veterans and individuals with disabilities, on August 27, 2013, the U.S. Department of Labor announced two new rules to update the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA) and the Rehabilitation Act of 1973.  Both laws apply to federal contractors and subcontractors. 

The rules are similar and require the following from federal contractors:

  • The new addition to the VEVRAA sets a benchmark for hiring protected veterans.   Employers should use either the national percentage of veterans in the labor force (currently 8%) or calculate a new benchmark based on data from the Bureau of Labor Statistics.  Similarly, the new addition to the Rehabilitation Act of 1973 sets a 7% utilization goal for qualified individuals with disabilities in each job group or in an entire employer’s workforce if the contractor has fewer than 100 employees. 
  • Document and compare the number of veterans and individuals with disabilities who apply for jobs with those who are actually hired. 
  • Encourage applicants to self-identify as veterans or as individuals with disabilities throughout the application process.
  • Incorporate specific equal employment opportunity language into a subcontract clause.
  • Publicize job openings in a format and manner so that state or local jobs services can access them.
  • Allow the Office of Federal Contract Compliance Programs to have access to and review these goals and results for compliance purposes.

In addition to the above, the update to the Rehabilitation Act incorporates the broad ADA Amendments Act definition of disability.  The bottom line for federal contractors – update your hiring processes and affirmative action plans to comply with the new DOL requirements!

To view the DOL press release, click here.

House Republicans Push Back on Davis-Bacon Prevailing Wage Expansion

Contributed by Jonathon Hoag

On July 11, 2013, House Republican Committee leaders sent a letter to the U.S. Department of Labor (DOL) requesting it explain why it issued guidance to cover land & field surveyors under federal prevailing wage law (i.e. Davis-Bacon Act).  This type of work has historically been excluded from prevailing wage requirements as preconstruction work.  In fact, a wage determination in accordance with the Davis-Bacon Act currently does not exist for this type of work.  However, the DOL, under extreme pressure from the International Union of Operating Engineers (IUOE), changed its position to include this type of work as covered by the Davis-Bacon Act.  The DOL knows that it has not recognized this work under prevailing wage law and does not have a wage determination applicable to this work, but it has requested that contractors pay survey crews the applicable wage for the classification of work that most closely matches the work performed.  The July 11, 2013 letter to the DOL points out that this abrupt change could have significant impact on contractors and it was made with little notice or justification. 

The House Republican Committee leaders have asserted that this type of change should only be made after the DOL goes through a transparent rulemaking procedure.  These House Committee leaders have requested numerous documents from the DOL that purportedly support the change and illustrate the involvement of organized union.  Only time will tell if this push back will have any impact on the DOL’s efforts to expand the prevailing wage law requirements.

Illinois contractors are very accustomed to this type of abrupt change in state prevailing wage law.  The aspect that is undoubtedly transparent is that organized labor is on a mission to widen the net with respect to the type of work covered by prevailing wage laws.  Contractors should be prepared for more arbitrary expansion to prevailing wage laws at the state and federal level.

D.C. Circuit Court Vacates U.S. DOL Interpretation Classifying Mortgage Loan Officers as Non-Exempt

Contributed by Samantha Esmond

On July 2, 2013, the United States Court of Appeals for the District of Columbia Circuit vacated the U.S. Department of Labor’s (“DOL”) prior 2010 administrative interpretation regarding mortgage loan officers’ non-exempt status under the Fair Labor Standards Act (“FLSA”) because the DOL did not adhere to the proper public notice, comment, and rulemaking process before issuing such guidance. (Mortgage Bankers Ass’n v. Harris, D.C. Cir., No. 12-5246, July 2, 2013).

By way of background, in 2006, the agency issued an Opinion Letter finding that the typical job duties of a mortgage loan officer qualified for the “administrative” exemption under the FLSA. However, in 2010 the DOL reversed its prior stance by explicitly withdrawing its prior 2006 Opinion Letter and issuing an “Administrator’s Interpretation” declaring that typical mortgage loan officers do not qualify as bona fide administrative employees.

The U.S. Circuit Court for the District of Columbia found that the DOL failed to comply with the federal Administrative Procedures Act when issuing its 2010 administrative interpretation. The Court held that a notice and public comment period were required under the Administrative Procedures Act because the 2010 interpretation effectively served as an amendment reversing the agency’s prior stance. Because the DOL simply issued with the 2010 interpretation without advance notice and an opportunity for public comment, the Court vacated its interpretation.

In its decision, the D.C. Circuit recognized that whether mortgage loan officers qualify for the “administrative exemption” under the FLSA is a difficult and contentious question and that even the DOL has found itself on both sides of the debate. As such, it is important to note that the D.C. Circuit did not invalidate the DOL interpretation on its merits.

Rather, the Circuit Court vacated the interpretation on procedural grounds and stated, “[i]f the Department of Labor (”DOL”) wishes to readopt the later-in-time interpretation, it is free to. We take no position on the merits of their interpretation. [The] DOL must, however, conduct the required notice and comment rulemaking.”

It remains to be seen whether the DOL will elect to issue new guidance and/or regulations on the applicability of the administrative exemption to mortgage loan officers in accordance with the public notice and comment requirements or choose to remain silent. Employers should consult with their labor and employment attorney when drafting, revising, interpreting, and/or reviewing employee job descriptions and employee classifications under the FLSA.